2\0.°nl 
Gap  o  . 

Our  United  States 


Three  Great  Mottoes 
Know  Thyself 
Control  Thyself 
Deny  Thyself 


For  Your  Country 
Know  Your  Resources 
Control  Your  Resources 
Use  Your  Resources 


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i,  iQOn 

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Bankers  Trust  Company 

NEW  YORK  CITY 

NUMBER  SIXTEEN  WALL  STREET 
FIFTH  AVENUE  AT  FORTY-SECOND  STREET 


Foreword 

THIS  PAMPHLET  has  been  prepared  with  a 
view  to  giving  busy  men  and  women  a 
quick  survey  of  the  wonderful  resources  of  our 
country,  and  to  answer  many  questions  which  we 
have  received  in  regard  to  the  topics  which  the 
pamphlet  covers. 

Our  experience  in  the  first  Liberty  Loan  cam¬ 
paign  developed  the  fact  that  our  country  has 
become  so  great,  and  the  interests  of  its  citizens 
so  diversified,  that,  in  a  way,  we  have  all  of  us 
become  specialists,  and  have  not  had  the  time  to 
take  a  broad  survey  of  the  country’s  resources  and 
activities  as  a  whole. 

This  campaign  also  developed  the  fact  that 
many  people  do  not  understand  exactly  what  a 
government  bond  is,  so  we  have  thought  it  would 
be  helpful  not  only  to  present  interesting  data  in 
regard  to  the  country  itself,  but  also  to  give  a 
comprehensive  statement  in  regard  to  the  indebt¬ 
edness  of  the  government,  and  in  regard  to  the 
nature  of  government  obligations. 

We  hope  that  the  pamphlet  will  be  found  help¬ 
ful  to  those  who  may  receive  it.  If  there  are 
questions  in  regard  to  the  topics  covered  which 
any  of  our  readers  would  care  to  have  elaborated, 
we  will  esteem  it  a  favor  to  be  asked  to  present 
additional  data. 


£ 


Introduction 

WE  in  the  United  States  have  become  accustomed, 
perhaps  with  pardonable  pride,  to  the  use  of  super¬ 
latives  in  connection  with  reviews  of  the  wealth  and 
industry  of  the  country  as  a  whole,  but  recent  statistics  give 
added  emphasis  that  the  facts  cannot  be  otherwise  presented. 
In  every  field  of  endeavor  production  has  reached  heights 
hitherto  undreamed,  and  our  prosperity  is  increasing  beyond 
all  precedent.  Our  national  income  has  increased  more  than 
50%  in  the  last  ten  years.  A  careful  analysis  of  business  con¬ 
ditions  gives  assurance  that  there  is  to  be  no  diminution  in  the 
volume  of  our  foreign  or  domestic  commerce  in  the  future;  on 
the  contrary,  it  is  bound  to  be  increased,  to  meet  the  greater 
demands  that  will  be  made  upon  us. 

The  astounding  growth  of  the  United  States  as  a  world 
power  brings  in  its  train  many  changes  in  our  economic  policy, 
but  revolutionary  though  they  may  be  in  many  lines  of  industry, 
none  will  be  more  drastic  than  those  which  are  now  matters  of 
history  in  other  periods  of  economic  renascence  through  which 
the  country  has  passed.  If  the  most  is  to  be  made  of  the 
opportunity  thrust  upon  us  to  become  the  creditor  nation  of  the 
world,  it  means  a  re-alignment  of  thought  and  re-adjustment 
of  energy  on  the  part  of  our  bankers  and  business  men  to  meet 
the  new  and  expanding  conditions  in  a  vastly  broader  horizon. 
‘‘The  old  order  changeth”  in  industry  as  well  as  in  science  and 
art,  and  the  new  fields  will  amply  repay  the  expenditure  in 
time  and  effort  necessary  really  to  know  the  requirements  we 
shall  be  called  upon  to  meet,  not  the  least  of  which  will  be  in 
gaining  the  good  will  of  our  southern  neighbors.  The  active 
competition  that  will  follow  the  present  conflict  will  be  a  test 
that  will  require  our  best  thought  and  most  persistent  endeavor 
to  meet  successfully,  but  our  equipment  is  superb;  our  captains 
of  industry  are  trained  in  organization  efficiency  as  never  before; 
our  resources  are  as  yet  untold.  Of  our  real  wealth  the  surface 
has  merely  been  scratched,  and  intensive  methods  of  pro¬ 
duction,  plus  a  basis  of  distribution  that  not  only  eliminates 
the  gigantic  waste  of  the  present  but  more  equitably  meets 


Our  UnIted  States 


[4 


the  requirements  of  our  neighbors,  will  be  the  order  of  the  future. 
Even  if  peace  should  occur  at  an  early  date  as  is  fervently 
to  be  hoped,  the  nation  is  going  forward  with  an  even  broader 
diversity  and  promise  of  permanent  prosperity.  Europe  will 
continue  to  call  for  vast  sums  of  money  from  this  country  and 
for  the  materials  required  for  reconstruction,  and  develop¬ 
ments  in  railroad  building,  manufacturing  and  commercial 
activities  in  South  America  and  Asia  will  cause  an  unequalled 
demand  for  our  commodities  of  every  sort. 

If  no  other  country  ever  had  such  an  opportunity  for  bus¬ 
iness  expansion,  surely  none  ever  had  the  preparation  we  now 
enjoy.  Our  gold  supply  of  over  $3,000,000,000  is  greater  than 
that  of  all  Europe  and  more  than  one-third  of  the  total  supply 
of  the  world.  The  effective  machinery  of  the  Federal  Reserve 
system  will  enable  us  to  finance  with  ease  the  requirements 
of  our  growing  commerce. 

The  credit  of  the  United  States  is  incomparably  the  highest 
in  the  world.  Not  only  is  our  wealth,  which  now  exceeds 
$225,000,000,000,  constantly  growing,  but  more  and  more  of 
our  national  income,  which  now  approaches  $45,000,000,000 
per  annum,  is  being  retained  in  this  country  and  saved  as  in¬ 
crement  for  added  wealth  in  future  years.  According  to  the 
Loree  estimate,  American  investors  have  repurchased  more 
than  three-fourths  of  the  $4,000,000,000  in  American  securities 
formerly  held  in  Europe,  thereby  retaining  in  this  country 
many  millions  of  dollars  formerly  sent  abroad  in  dividends  and 
interest.  Furthermore,  since  the  beginning  of  the  war  we  have 
loaned  to  foreign  countries  more  than  $4,000,000,000,  which  will 
result  in  added  millions  in  interest  being  paid  to  us  each  year 
by  outsiders.  When  these  obligations  mature  we  shall  have 
created  a  huge  credit  balance  in  foreign  markets  that  will  still 
further  enable  us  to  dominate  the  world's  finances.  It  may  be 
mentioned  as  an  index  of  our  '‘liquid"  wealth  that  our  banking 
resources  at  the  present  time  exceed  $35,000,000,000,  and  that 
the  savings  of  the  nation  last  year  are  estimated  to  have  been 
not  less  than  $5,000,000,000. 


Who  We  Are  and  Where 
We  Came  From 

A  PERFECT  inventory  of  the  inhabitants  of  any  territory, 
a  population  stock-taking  which  shall  reveal  how  many 
‘and  who  they  are,  where  they  hail  from,  how  they  fare, 
and  whither  they  are  headed,  is  a  resultant  of  two  factors — 
science  and  conscience. 

Whenever  the  political  theory  of  a  state  is  autocratic  or 
oligarchic,  its  censuses  will  be  taken  to  subject,  not  to  protect, 
the  non-conformist. 

Conscience  in  census-taking  first  appeared  in  the  world’s 
then  newest  and  thinnest  populated  country — The  United 
States  of  1790:  Science  in  census-tabulating  was  first  applied, 
in  1846,  to  the  planet’s  most  densely  populated  national  irea — 
unhappy  Belgium. 

The  people  of  the  United  States,  in  the  words  of  the  French 
economist,  Moreau  de  Jonnes,  “instituted  the  statistics  of  their 
country  on  the  very  day  when  they  founded  their  government, 
and  regulated  by  the  same  instrument,  the  census  of  inhabitants, 
their  civil  and  political  rights,  and  the  destinies  of  their  nation.’’ 

The  United  States,  the  first  constitutional  census-taking 
country  in  the  world,  is  now  assembling,  by  selective  census 
process,  an  army  to  be  dispatched  to  free  the  very  country 
which  taught  us  how  to  measure  “who  we  are  and  where  we 
came  from.’’ 

It  was  in  1850,  four  years  after  Belgium’s  first  scientific 
census  had  revealed  the  influence  of  Quetelet’s  economic  studies, 
that  the  United  States  first  instructed  federal  census  enumera¬ 
tors  to  ascertain  the  country  of  birth  of  our  foreign-bom. 

The  Liberty  War  of  1917  has  shelved  all  existing  statistical 
treatments  of  our  country’s  population.  We  have  been  wont 

This  chapter  especially  prepared  for  Bankers  Trust  Company  by  the  eminent  student 
of  population  statistics,  Rev.  Walter  Laidlaw,  Ph.  D.,  Executive  Secretary  New  York 
Federation  of  Churches. 


Our  United  States 


[6 


to  classify  European  immigration,  for  instance,  in  terms  of 
north-western  Europe  and  south-eastern  Europe.  The  thir¬ 
teenth  census,  and  the  forty-two  volumes  of  the  Immigration 
Commission  of  1907,  follow  this  division.  But  “north-western 
Europe”  includes  Germany,  with  which  we  are  at  war;  the 
United  Kingdom  of  Great  Britain  and  Ireland;  France,  our 
gallant  ally;  Belgium,  whose  soil  we  have  set  ourselves  to  re¬ 
store,  and  five  of  the  neutrals,  while  “south-eastern  Europe,” 
as  a  classification,  mixes  Turks  and  Greeks,  Italians  and  Aus¬ 
trians,  Serbians  and  Bulgarians. 

All  hitherto  classifications  must,  therefore,  unless  our  study 
of  who  we  are  and  where  we  came  from  is  to  be  purely  academic, 
be  thrown  into  the  discard,  and  this  study  groups  the  nation 
into  Allied,  Central  Powers  and  Neutrals  groups. 

I 

We  are ,  first  of  all ,  a  nation  derived  from  the  3,172,444  whites 
and  737,181  negroes  enumerated  in  the  census  of  1790.  The 
whites  of  that  census,  in  1908,  were  tabulated  on  the  family 
names  of  the  enumerators’  sheets  of  1790,  most  of  which  are  on 
file  in  Washington. 

The  white  population  of  the  nation  in  1790  was  made  up  of 
2,906,414,  or  91.6%,  from  the  nations  comprising  the  Entente 
Allies  of  to-day.  Of  this  percentage,  .6%  was  French  and  the 
remaining  91%  English,  Scotch  and  Irish.  The  present  Ger¬ 
many  contributed  only  176,407,  or  5.6%,  and  of  the  present 
neutrals  the  Dutch  contributed  78,959,  or  2.5%,  and  all  other 
whites  .3%. 

When  the  United  States  of  1790  took  this  census,  Sweden,  a 
perplexed  neutral  of  to-day,  was  the  only  country  in  the  world 
which  had  taken  a  census  of  its  people.  Sweden  had  been 
making  enumerations  since  1749;  Spain  made  one  in  1798; 
Napoleon  forced  France  to  count  her  man-power  in  1801,  and 
England,  to  defeat  him,  followed  suit  in  the  same  year. 


7] 


Who  We  Are  and  Where  We  Came  From 


On  the  first  of  July,  1917,  the  continental  United  States  had 
an  estimated  population  of  103,635,300,  and  these  figures  were 
the  numerical  basis  of  quotas  for  the  selective  army.  This 
total  includes  descendants  of  the  whites  enumerated  in  1790  to 
an  estimated  number  of  38,828,000 — classified,  35,566,448  as 
descended  from  the  nations  comprising  the  allies  of  to-day, 
2,174,368  descended  from  the  Germans  of  Revolutionary  times, 
and  1,087,184  Dutch  and  other  whites,  comprising  the  neutral 
nations  of  to-day. 

The  selective  draft,  designed  to  give  the  nation  a  force  to 
fight  against  Pan-Germanism,  was  therefore  applied  to  a  people 
37. 5  %  of  whom  were  descended  from  whites  who  fought  against 
Pan-Britishism. 

II 

We  are  a  nation ,  secondly ,  whose  phenomenal  population 
growth  has  been  immensely  increased  by  immigration — our  great 
growth  is  largely  a  product  of  immigrants  seeking  food  and  futures 
and  of  the  fecundity  which  always  characterizes  the  early  family 
history  of  successful  immigrant  food-hunting. 

The  second  element  in  our  population  is  whites  of  Post- 
Revolutionary  grand-parentage. 

In  the  year  when  Mr.  Monroe  became  President  (1817), 
20,000  immigrants  arrived  in  the  United  States,  and,  following 
this,  and  coincident  with  humanitarian  movements  designed 
to  reduce  the  mortality  of  immigrants  in  transit  at  sea,  a  law 
went  into  operation,  July  1,  1819,  compelling  the  registration 
of  all  immigrants  at  ports  of  entry. 

This  was  the  second  stage  of  the  nation’s  population  stock¬ 
taking.  A  third  was  the  first  census  of  the  foreign-bom,  in 
1850,  following  the  immense  immigration  of  the  forties,  and 
coincident  with  the  “Know  Nothing”  movement. 

Thirty  years  later,  in  1880,  the  first  count  of  the  native- 
born  of  foreign  parentage  was  made.  In  1910,  after  the  lapse  of 


Our  United  States 


[8 


another  thirty  years,  the  first  mother-tongue  count  of  the 
native  whites  of  foreign  parentage  was  undertaken. 

Using  material  from  these  sources  for  the  computation,  the 
United  States  had,  in  1880,  from  the  10, 189,429  immigrants  of  the 
years  1820-1850 — 7,794,000  native  whites  of  native  parentage, 
who  included  at  least  2,927,000  of  foreign  grand-parentage. 
Our  United  States,  July  1,  1917,  were  therefore  17.7%  made  up 
of  whites  of  Post-Revolutionary  grand-parentage. 

The  allies  lead,  nine  to  seven. 


III 

The  third  element  in  our  nation  is  composed  of  the  native 
whites  of  foreign  parentage.  These,  July  1,  1917,  are  estimated 
to  have  been  as  follows:  From  allied  countries  10,856,439; 
from  Germany  and  other  Central  Powers  8,125,378;  from  neutral 
countries  2,599,512 — or  a  total  of  21,581,329. 

We  are  a  people,  therefore,  who,  July  1,  1917,  were  20.8% 
native  whites  of  foreign  parentage. 

The  allies  lead  eleven  to  eight. 

IV 

We  are  a  people  still  14.3%  foreign-born.  The  white  foreign- 
bom  July  1,  1917  are  estimated  as  follows: 

Allies  8,272,027 

Central  Powers  4,437,028 

Neutrals  1,953,206 

or  a  total  of  14,662,261 

We  were  therefore,  a  people,  on  the  date  of  the  selective 
draft  census  computation,  14.1%  foreign-bom  white,  with  .2% 
additional  foreign-born  colored. 


The  allies  lead  two  to  one. 


9  ]  Who  We  Are  and  Where  We  Came  From 


V 


The  nation  of  July  r,  igij  has  so  far  been  distributed  as  fol¬ 
lows: 


1.  Descendants  of  whites  enumerated  in  1790 

2.  “  “  immigrants,  1820-1880 

3.  Native  whites  of  foreign  parentage 

4.  White  foreign-born 

Total  whites 


38,828,000 

17,687,952 

21,581,329 

14,662,261 

92,759,542 


This  makes  the  whites  of  the  nation,  July  1,  1917 — 787,276 
more  than  the  whole  nation  of  April  15,  1910. 

There  remain  to  be  accounted  for  of  the  census  estimate 
of  July  1,  1917 — 10,875,758  Negroes,  Indians  and  Asiatics. 
These  are  distributed  as  follows: 


Native 

Foreign  Born 

Total 

Negroes 

io,343;3io 

68,948 

10,412,258 

Indians 

286,984 

3,016 

290,000 

Chinese 

18,391 

46,609 

65,000 

Japanese 

6,148 

98,852 

105,000 

All  others 

390 

3>no 

3.500 

10,655,223 

220,535 

10,875,758 

This  table  is 

drawn,  as  a 

source  from  “ 

Immigration 

Races,”  but  its  detailed  accuracy  is  by  no  means  guaranteed, 
owing  to  the  difficulty  of  classification. 


VI 

Summarizing  and  concluding  the  enquiry  into  who  we  are 
and  where  we  came  from,  it  should  be  borne  in  mind  that  the 
mother-tongue  classification  of  the  census  of  1910,  discloses  that 
“ Country  of  Origin”  is  not  always  the  country  of  sympathy  of 
the  foreign-born. 

It  is  altogether  likely  that  the  maximum  of  Central  Powers 
sympathizers,  July  1,  1917,  was  much  less  than  the  number 
of  people  of  German,  Bulgarian,  Turkish  and  Magyar  mother- 
tongue  or  a  total  of  8,572,434  persons — less  than  9%  of  the 
nation  of  now. 


Our  United  States 


[10 


The  Germans  descended  from  the  Germans  of  Revolutionary 
stock  are  as  American  as  George  Washington,  and  the  German 
immigration  preceding  1880  was  not  tainted  by  Treitschke. 
The  Kaiser  came  to  the  throne  in  1888,  and  Pan-Germanism 
as  a  movement  did  not  take  definite  form  until  1895. 

The  Allies  lead  in  this  summary  in  every  section,  and  while 
the  German  figures  are  totaled,  the  undoubted  loyalty  of  the  mass 
of  Germans  entitles  them  to  discount  the  total  at  least  80%. 

A  people  not  one-tenth  of  German  mother-tongue  is  arrayed 
against  Pan-Germanism,  and  its  citizens  of  British  parentage 
and  birth,  alone,  outnumber  citizens  of  German  parentage  and 
birth,  at  least  three  to  one. 


Location  and  Progress 

BEFORE  a  study  of  natural  resources  or  commercial 
activity  can  be  made,  it  must  be  borne  clearly  in  mind  not 
only  “who  we  are”  but  also  “what  we  are”  and  “where 
we  are.”  The  foundation  laid  by  our  forefathers  would  have 
been  of  very  little  good  without  a  structure,  and  this  our  entre¬ 
preneurs  have  been  providing  for  over  a  century,  but  with  so 
little  regard  for  the  future  that  the  time  is  now  come  when 
conservation  is  the  watchword  and  efficiency  must  be  coupled 
with  industry  as  never  before. 

Favored  by  a  location  entirely  within  the  temperate  zone, 
extending  from  within  one  degree  of  the  tropics  seventeen 
hundred  miles  north  to  the  Canadian  boundary,  climatic  con¬ 
ditions  are  ideal  for  the  widely  diversified  crops  which  constitute 
the  primary  wealth  of  a  nation,  and  were  intensive  cultivation 
practiced  here  as  abroad  the  entire  world  could  be  fed  and 
clothed  from  our  surplus.  The  abundance  of  raw  materials 
required  by  the  manufacturing  industries  and  the  degree  of 
availability,  including  transportation  facilities,  are  unequalled. 
Food  supplies  and  materials  for  manufacture  are  more  varied 
in  the  United  States  than  in  any  other  country  and  the  well 
distributed  forests  contain  great  varieties  of  the  timber  most 
needed  in  large  quantities. 

We  embrace  an  area  exceeding  three  million  square  miles, 
excluding  Alaska,  Hawaii  and  the  insular  possessions — which 
are  empires  in  themselves,  having  tremendous  potential  re¬ 
sources.  While  our  population  in  the  last  fifty  years  has  in¬ 
creased  from  thirty-five  million  to  more  than  one  hundred 
million,  our  wealth  has  increased  from  twenty-five  billions  to 
two  hundred  and  twenty-five  billions  of  dollars,  or  more  than 
three  times  the  rate  of  the  increase  in  population. 

During  the  colonial  period  the  population  of  the  United 
States  was  confined  to  a  narrow  strip  of  territory  along  the 
Atlantic  coast.  By  the  middle  of  the  eighteenth  century  the 
river  valleys  had  been  settled,  and  the  pioneers  had  reached 
the  barrier  of  the  Appalachian  mountains,  but  the  region  beyond 


Our  United  States 


[12 


this  barrier  had  been  penetrated  by  only  a  few  explorers.  By 
1770  the  population  had  increased  to  2,500,000,  of  whom  the 
vast  majority  were  engaged  in  agricultural  pursuits.  The 
division  of  labor  between  different  sections  of  the  country  was 
but  slightly  developed,  and  in  a  large  measure  each  family  pro¬ 
duced  on  its  own  land  the  chief  articles  needed  for  its  own 
consumption.  Indian  corn  had  proved  itself  the  most  valuable 
crop  because  of  the  quick  return  from  newly  cleared  land  and 
its  utility  as  food  for  man  and  feed  for  cattle.  Another  indigen¬ 
ous  product,  tobacco,  formed  the  basis  of  our  earliest  export 
trade,  and  with  rice  and  indigo  laid  the  foundation  of  the 
economic  growth  of  the  southern  seaboard.  Certain  manu¬ 
factures  were  carried  on  at  home,  but  these  were  almost  without 
exception  of  the  cruder  forms  of  goods  not  otherwise  obtainable, 
and  most  of  the  more  important  manufactured  goods  were 
brought  from  England. 

The  population  grew  very  rapidly,  and  reached  5,000,000 
by  1800;  production  increased  correspondingly,  but  it  was 
production  along  the  old  lines  with  little  advance  in  the  direction 
of  the  new  industrial  development  which  was  already  of  im¬ 
portance  in  England.  In  the  south  large  estates  given  over 
to  the  production  of  cotton  were  numerous,  while  in  the  north 
small  holdings  with  diversity  of  agriculture  prevailed.  The 
greatest  commercial  activity  was  found  in  New  England. 
Domestic  manufactures  were  in  a  flourishing  condition,  but 
little  advance  had  been  made  in  the  introduction  of  mechanical 
processes  and  the  factory  system  was  unknown. 

At  this  time  the  total  area  of  the  country  was  but  828,000 
square  miles,  limited  on  the  north  by  the  boundary  that  now 
exists,  on  the  south  by  what  is  now  the  northern  boundary  of 
Florida,  and  on  the  west  by  the  Mississippi  River,  which  was 
the  territory  the  treaty  of  peace  with  Great  Britain  gave  to  the 
United  States  at  the  close  of  the  revolutionary  war. 

In  1803  the  United  States  purchased  from  France  the  ter¬ 
ritory  then  known  as  the  Province  of  Louisiana,  a  territory  over 
1,000,000  square  miles  in  extent  and  extending  from  the  Gulf 


13] 


Location  and  Progress 


of  Mexico  to  the  British  Possessions,  and  from  the  Mississippi 
to  the  Rocky  Mountains,  and  in  1819  we  purchased  from  Spain 
a  territory  of  some  59,000  square  miles  then  known  as  the 
Floridas.  Later,  Texas  was  admitted  as  a  state,  and  at  the 
close  of  the  war  with  Mexico  that  country  ceded  to  us  an  area 
of  over  a  half-million  square  miles.  The  Gadsden  Purchase 
of  about  45,000  square  miles  completed  the  main  territory  of 
the  United  States  as  it  is  to-day. 

Nearly  all  the  land  between  the  crest  of  the  Alleghanies 
and  the  Pacific  once  belonged  to  the  Federal  government,  and 
its  transfer  to  the  private  ownership  of  settlers,  miners,  lumber¬ 
men  and  others  has  been  a  dominant  factor  in  the  economic, 
social  and  political  life  of  the  nation.  On  July  1,  1917,  the 
United  States  still  held  255,000,000  million  acres  of  land  which 
was  not  reserved.  More  than  one-half  of  this  area  has  been 
surveyed  and  is  available  for  settlement. 

The  great  prosperity  which  followed  the  depression  and 
panic  of  1893  was  sufficient  to  establish  both  the  agricultural 
and  industrial  supremacy  of  this  country  among  all  nations,  and 
at  the  same  time  raised  it  to  be  a  leading  factor  in  the  export 
market  of  manufacturers.  Before  the  Civil  war  it  was  the  gen¬ 
eral  opinion  that  this  country  must  of  necessity  be  primarily  an 
agricultural  country  and  that  our  foreign  trade  would  consist  of 
an  exchange  of  our  food  and  raw  materials  for  foreign  manufac¬ 
tured  products.  The  new  era  promises  to  be  just  the  reverse; 
the  United  States  will  certainly  become  more  and  more  an  im¬ 
porter  of  raw  materials  and  an  exporter  of  finished  products. 

The  country  now  has  ample  supplies  of  food  products  for 
its  own  consumption  and  a  great  surplus  for  export;  it  has  a 
great  supply  of  cotton,  and  in  a  less  measure,  of  wool,  for  its 
clothing,  and  of  coal,  iron,  copper  and  lumber  for  building 
and  manufactures.  Its  chief  dependence  for  outside  supplies 
of  important  commodities  is  on  the  non-European  countries 
for  its  coffee,  tea,  sugar,  hides  and  fur,  silk  and  rubber.  No 
other  nation  is  able  to  produce  so  completely  within  its  own 
borders  the  products  which  its  people  need. 


Agriculture 

THE  agricultural  products  of  the  United  States  are  greater 
than  those  of  any  other  country  in  the  world.  The  total 
value  of  all  crops  and  animal  products  for  1916,  was 
$13,449,000,000,  although  throughout  the  country  it  was  an  off 
year  in  the  yield  of  many  crops.  Unfortunately,  the  crops  of 
Argentina,  Australia  and  Canada  were  also  below  normal,  and 
if  it  had  not  been  for  the  reserve  stock  of  1 9 1 5  the  world  situation 
in  food  supplies  would  have  been  desperate  in  the  extreme. 

Wheat  is  our  principal  export  crop  among  the  cereals.  The 
crop  varies  in  amount  from  one-third  to  one-half  that  of  Europe 
in  normal  times.  The  year  1915  witnessed  the  greatest  crop 
in  the  history  of  the  country — more  than  1,025,000,000  bushels. 
In  1916  the  production  fell  to  about  640,000,000  bushels,  but 
it  is  estimated  that  the  crop  for  1917  will  exceed  that  amount 
by  about  28,000,000  bushels. 

Our  largest  and  most  valuable  crops,  however,  are  com  and 
hay.  They  are  the  basis  of  the  great  stock-raising  industry  of 
the  west.  Com  stands  without  a  rival  in  respect  to  area  planted 
and  to  the  value  of  the  product.  The  United  States  produces 
about  four-fifths  of  the  world’s  supply  of  com,  and  its  acreage 
is  about  as  large  as  that  of  all  other  crops,  combined.  The 
production  of  com  in  1916,  which  totalled  2,600,000,000  bushels, 
exceeded  the  crop  of  1880  by  almost  exactly  1,000,000,000 — 
and  it  is  estimated  that  the  1917  production  will  reach  the  huge 
total  of  3,250,000,000  bushels  with  the  stupendous  market  value 
of  around  $6,000,000,000  as  against  a  value  last  year  of 
$2,295,783,000. 

Hay  is  of  greater  relative  importance  in  regions  not  well 
adapted  to  the  growing  of  com,  but  where  the  demand  for 
stock-food  is,  nevertheless,  great.  It  was  grown  last  year  on 
55,000,000  acres,  and  the  yield  of  90,000,000  tons  was  valued 
at  over  $1,000,000,000.  Unfavorable  conditions  have  limited 
the  yield  this  year,  however,  and  the  production  is  not  expected 
to  greatly  exceed  75,000,000  tons,  although  the  increased  prices 


15] 


Agriculture 


will  probably  give  about  the  same  money  value  to  the  product 
as  that  of  1916. 

The  cotton  crop  is  one  of  the  most  important,  and  as  an 
export  crop  the  most  important,  of  all  the  products  of  agricul¬ 
ture,  about  65%  of  the  world’s  supply  being  grown  in  this 
country.  Its  growth  has  been  an  important  factor  in  the 
development  of  the  south  since  the  beginning  of  the  nineteenth 
century,  when  the  annual  production  was  less  than  10,000,000 
pounds.  By  1815  there  had  been  a  phenomenal  growth  to 
85,000,000  pounds,  due  to  an  extraordinary  foreign  demand. 
The  production  steadily  increased  each  year,  with  but  few 
exceptions,  until  1914,  when  16,000,000  bales,  each  weighing 
500  pounds  (8,000,000,000  pounds)  were  produced.  The  pro¬ 
duction  in  1916  fell  to  11,450,000  bales,  but  it  is  expected, 
according  to  the  September  report  of  the  Secretary  of  Agricul¬ 
ture,  that  the  1917  crop  will  total  more  than  12,500,000  bales. 

Notwithstanding  the  fact  that  we  have  been  blessed  this 
year  with  an  abundant  harvest,  it  will  be  necessary,  we  are  told, 
greatly  to  conserve  our  use  of  wheat  in  order  that  there  may  be 
an  adequate  quantity  for  the  maintenance  of  our  allies.  It  is 
estimated  that  under  normal  conditions  620,000,000  bushels  of 
wheat  are  required  for  home  consumption  and  seed.  This 
would  leave  a  surplus  of  48,000,000  bushels — but  we  shall  send 
much  more  across  the  sea — probably  at  least  150,000,000.  The 
home  consumption  of  wheat,  therefore,  must  be  greatly  reduced. 
It  is  fortunate  that  the  large  crops  of  corn,  potatoes  and  other 
food  products  will  enable  us  to  make  this  contribution  to  the 
success  of  the  war  without  suffering  any  real  hardship. 

The  market  value  of  this  year’s  crops,  it  is  officially  esti¬ 
mated,  will  be  70%  in  excess  of  the  value  of  last  year’s  crops, 
and  the  market  value  of  live-stock  products  nearly  50%  greater 
than  the  value  of  similar  products  last  year. 

It  is  interesting  to  note  the  development  and  extension  of 
agriculture  as  an  industry  in  the  last  half-century.  Prior  to 
the  Civil  war,  agricultural  methods  were  comparatively  primi- 


Our  United  States 


[  16 


tive,  but  the  scarcity  of  labor  due  to  that  war  resulted  in  the 
.invention  and  use  of  labor-saving  machinery  on  an  unprece¬ 
dented  scale.  It  has  even  been  asserted  that  the  issue  of  the 
Civil  war  was  decided  by  the  invention  of  the  reaper,  and  there 
is  no  doubt  that  the  ultimate  victory  of  the  north  was  largely 
due  to  the  fact  that  the  gathering  of  the  crops  of  the  west  with 
the  aid  of  machinery  proceeded  without  interruption,  although 
a  large  proportion  of  the  male  population  was  in  the  army. 
After  the  war,  production  kept  pace  with  the  increase  in  popu¬ 
lation,  and  with  the  betterments  in  transportation  facilities 
the  produce  not  only  found  markets  in  all  parts  of  this  country, 
but  extended  to  every  corner  of  the  world. 

The  300,000,000  acres  devoted  to  farming  in  1850  had 
increased  by  more  than  200,000,000  acres  in  1875,  and  in  1900  the 
area  so  used  was  838,000,000  acres.  It  is  now  estimated  to  be 
more  than  900,000,000  acres,  valued  in  excess  of  $50,000,000,000, 
but  it  is  estimated  by  the  Department  of  Agriculture  that  less 
than  one-half  of  this  area  is  economically  utilized,  and  this 
accounts  for  the  fact  that  up  to  1914  the  imports  of  agricultural 
products  into  the  United  States  increased  more  rapidly  than  the 
exports.  Intensive  farming,  raising  the  largest  possible  amount 
from  a  given  area,  is  practiced  but  little  in  this  country.  Every¬ 
where  land  is  abundant  and  comparatively  cheap,  while  labor 
is  scarce  and  commands  high  wages,  and  it  has  accordingly  been 
the  custom  to  harvest  the  crops  from  a  large  area  by  the  least 
work  rather  than  from  a  smaller  area  at  a  higher  labor  cost. 
As  lands  become  higher  in  price,  farming  is  bound  to  become 
more  intensive,  the  yield  per  acre  will  become  greater  and  the 
crops  will  correspondingly  increase.  There  are  some  800,000,000 
acres  of  land  in  the  arid  zone  of  the  west  and  southwest  that 
can  be  reclaimed  and  made  exceedingly  fertile  by  irrigation,  and 
100,000,000  more  on  the  Atlantic  coast  can  be  reclaimed  and 
made  available  for  agriculture  by  proper  drainage.  It  is  a 
sad  commentary  on  our  national  foresight  that  until  recent 
years  this  reclamation  had  been  left  almost  entirely  to  individual 
enterprise,  but  it  is  reassuring  to  note  that  governmental  atten- 


Agriculture 


17] 


tion  is  more  and  more  being  directed  along  these  lines.  The  Agri¬ 
cultural  Act  approved  August  n,  1916,  by  which  $25,000,000 
was  appropriated  for  the  Department  of  Agriculture,  will  con¬ 
siderably  enlarge  the  functions  of  this  department,  and  the 
Federal  Farm  Loan  Act,  designed  to  enable  farmers  to  borrow 
money  on  farm  mortgage  security  at  reasonable  rates  for  rela¬ 
tively  long  periods  of  time,  should  lead  to  a  largely  increased 
production.  Accordingly,  we  may  yet  be  able,  when  the  nation 
is  fully  awake  to  its  opportunity,  “to  feed  the  world  with  our 
surplus.” 


Mineral  and  Forest  Resources 

THE  United  States  produces  in  commercial  quantity 
practically  every  mineral  known  in  art  and  industry, 
and  most  of  them  in  an  amount  not  only  sufficient  for 
its  own  use  but  also  for  export.  Since  1880  the  total  mineral 
production  has  grown  in  value  from  $365,000,000  to  more  than 
$2,500,000,000;  the  production  of  iron,  copper  and  gold  among 
the  metals  and  coal  and  petroleum  among  the  non-metallic 
minerals  forming  the  most  striking  increases. 

Coal  is  one  of  the  most  important  items  of  our  natural 
wealth,  and  is  foremost  in  both  value  and  quantity  among  our 
mineral  resources.  It  is  one  of  the  most  widely  distributed  of 
all  the  minerals,  but  only  a  comparatively  small  area  is  available 
for  production  in  commercial  quantities.  It  has  been  mined 
in  the  United  States  since  the  Colonial  times  and  the  production 
has  increased  with  amazing  rapidity.  In  1880  about  65,000,000 
tons  were  mined,  in  1900  about  240,000,000  tons,  and  in  the 
year  ending  September  1,  1917,  about  550,000,000  tons  were 
produced  for  our  own  use  and  for  export. 

Iron  ore  ranks  next  in  importance  to  coal,  and  is  found  in 
practically  every  state  in  the  Union.  The  three  principal 
ranges,  however,  where  iron  is  produced  in  large  quantities, 
are  the  Appalachian,  the  Cordilleran  and  the  Lake  Superior 
region.  In  this  item,  too,  the  increase  in  production  has  been 
tremendous.  In  1880  but  7,000,000  tons  were  mined.  By 
1900  this  had  been  increased  by  more  than  20,000,000  tons  and 
it  is  estimated  that  in  the  year  ending  September  1,  1917,  the 
production  totalled  more  than  75,000,000  tons. 

The  United  States  is  the  greatest  copper-producing  country 
in  the  world,  more  than  62  %  of  the  world’s  output  being  mined 
in  this  country.  The  existence  of  copper  on  the  south  shore 
of  Lake  Superior  was  known  as  early  as  the  18th  Century,  but 
the  development  of  the  mines  which  constitute  the  present 
extensive  copper  works  of  northern  Michigan  did  not  begin 


19] 


Mineral  and  Forest  Resources 


until  1845.  It  is  only  since  1880  that  copper  mines  have  been 
operated  with  great  success  in  Arizona,  Montana,  Utah  and 
California.  The  production,  which  in  1880  totalled  only  27,000 
tons,  grew  to  270,000  tons  in  1900,  513,000  tons  in  1914,  and 
it  is  estimated  that  the  production  for  the  twelve  months  end¬ 
ing  September  1,  1917,  was  approximately  900,000  tons. 

The  production  of  gold  in  the  United  States  is  greater  than 
that  of  any  other  country  in  the  world  except  the  Transvaal, 
being  nearly  one-fourth  of  the  world’s  output.  Practically 
all  of  it  is  mined  in  the  Cordillera  region,  and  in  Alaska.  The 
annual  production,  which  in  1880  was  but  $36,000,000  in  value, 
amounts  to  but  slightly  less  than  $100,000,000  in  value  per 
annum  at  the  present  time. 

Following  the  discovery  of  the  Comstock  Lode  in  Nevada 
in  1859,  the  United  States  was  for  a  time  the  greatest  silver- 
producing  country  in  the  world.  It  is  now  second  only  to 
Mexico,  which  has  vast  silver  deposits,  many  of  which  are 
still  awaiting  development.  The  annual  production  of  silver 
in  the  United  States  amounted  to  about  $50,000,000  in  value  in 
1916,  which  is  greater  by  far  than  the  combined  output  of  all 
Europe. 

The  mining  industry  as  a  whole  is  now  enjoying  the  greatest 
prosperity  in  its  history,  the  enormous  demand  for  war  pur¬ 
poses  calling  for  unprecedented  effort  to  stimulate  production 
to  the  highest  point.  Prices  have  made  new  high  records  and 
mines  have  not  only  been  worked  to  full  capacity  but  old  ones 
have  been  re-opened  and  the  search  for  new  ones  has  been 
unceasing  if  not  notably  successful.  The  whole  country  has 
benefited  by  the  resultant  activity.  Largely  increased  divi¬ 
dends  have  been  the  rule  and  profits  have  been  almost  uni¬ 
versally  shared  with  the  workmen,  either  in  the  form  of  in¬ 
creased  wages  or  bonuses. 

The  business  of  the  Steel  Corporation,  usually  considered 
an  excellent  index  of  trade,  averaged  over  11,000,000  tons  a 


Our  United  States 


[20 


month  in  the  first  eight  months  of  this  year,  against  an  average 
of  9,300,000  tons  a  month  in  1916  and  4,300,000  tons  a  month 
in  1914. 

It  is  considered  certain  that  the  demand  for  all  metals  will 
continue  to  be  far  above  former  normal  requirements  for  a  long 
period,  for  the  basic  materials  now  required  for  warfare  are 
the  same  as  those  required  for  reconstruction — therefore  the 
United  States  should  maintain  its  leadership  in  these  industries 
long  after  the  war  shall  cease. 

Forests 

The  United  States  forests  cover  550,000,000  acres,  or  about 
one-fourth  the  area  of  the  whole  country.  Of  these  only  a 
small  part  are  publicly  owned,  the  privately  owned  forests 
containing  more  than  four-fifths  of  the  standing  timber  in  the 
country.  As  the  present  rate  of  cutting  is  three  times  the  annual 
growth,  the  need  for  conservation  is  apparent.  More  than 
22,000,000,000  cubic  feet  of  all  kinds  of  wood,  with  a  total 
value  exceeding  $1,250,000,000,  are  annually  taken  from  the 
forests  of  the  United  States,  and  unless  renewed  vigor  is  directed 
to  the  elimination  of  waste  and  the  restriction  of  wide  areas 
the  next  decade  will  witness  a  great  scarcity  of  native  timber. 

At  the  present  time  the  National  forests  comprise  about 
1 50,000,000  acres  and  the  government  annually  sets  out  about 
10,000,000  small  trees  which  will,  of  course,  require  years  of 
growth  before  they  become  of  commercial  value.  As  an  in¬ 
dication  of  how  this  development  in  our  natural  resources  has 
been  neglected,  it  may  be  mentioned  that  while  our  Forestry 
Department  has  but  one  man  to  every  75,000  acres,  Germany 
before  the  war  had  one  man  to  every  1700  acres.  Increased 
attention  is  every  year  being  directed  to  this  field,  however, 
and  it  is  hoped  that  within  a  few  years  our  denuded  acres  will 
be  entirely  restocked. 


Manufacturing 

THE  United  States  ranks  first  among  the  nations  of  the 
world  in  manufacturing;  its  abundance  of  raw  materials, 
not  only  for  widely  varied  forms  of  manufacturing,  but 
also  for  fuel,  food  and  clothing,  the  excellence  and  extent  of 
its  transportation  facilities — both  rail  and  water — and  the 
freedom  of  interstate  trade,  contributing  notably  to  its  develop¬ 
ment  in  this  respect.  The  invigorating  climate  and  the  natural 
ingenuity  and  resourcefulness  of  the  people  are  advantages  of 
prime  importance  in  the  industry  of  the  nation.  A  great  factor 
in  our  industrial  supremacy  is  the  contribution  of  various 
methods  and  much  energy  on  the  part  of  emigrants  coming 
from  all  parts  of  the  world  to  the  development  of  the  land 
chosen  for  their  home.  Finally,  the  influence  of  tariff  legis¬ 
lation  in  fostering  domestic  industries  by  shutting  out  the  pro¬ 
ducts  of  cheaper  foreign  labor  must  be  taken  into  account. 

The  growth  of  our  manufacturing  industry  has  been  phe¬ 
nomenal.  In  1810,  the  first  year  for  which  we  have  authentic 
figures,  the  Secretary  of  the  Treasury  estimated  the  total 
value  of  manufactures  to  be  $120,000,000  and  by  1850  this 
figure  had  grown  to  over  $1,000,000,000.  Between  1850  and 
1900,  while  the  population  of  the  country  increased  little  more 
than  three-fold,  from  24,000,000  to  76,000,000,  manufactures 
increased  almost  nineteen-fold  in  amount  of  capital  invested, 
from  $533,000,000  to  $9,800,000,000  and  twelve-fold  in*  the 
value  of  the  products,  from  $1,019,000,000  to  $13,014,000,000. 
Most  of  this  expansion  occurred  in  the  period  following  1880, 
when  we  first  began  to  utilize  our  national  resources  on  a  broad 
scale  and  when  through  improvements  in  inland  and  over-sea 
transportation,  our  domestic  and  foreign  markets  extended  to 
include  the  far  western  states  and  Europe. 

The  last  seventeen  years  has  seen  a  continuance  of  this  in¬ 
dustrial  expansion.  The  capital  invested  in  manufactures 
has  more  than  doubled,  while  the  products  have  increased  in 
value  over  100  per  cent,  not  including,  for  the  purpose  of 


Our  United  States 


[22 


comparison,  what  are  primarily  “war  orders.  ”  There  are 
to-day  more  than  300,000  manufacturing  establishments  in  the 
country,  with  a  total  capitalization  exceeding  $25,000,600,000 
and  producing  goods  valued  in  excess  of  $30,000,000,000  per 
annum.  The  steel  industry  is  the  greatest  of  all  present  en¬ 
terprises,  measured  by  |  the  money  value  of  the  .product.  This 
is  followed  by  slaughtering  and  meat-packing,  lumbering,  grain 
products,  cotton  goods  products,  and  automobiles,  in  the 
order  mentioned. 

As  manufactures  are  an  important  item  in  our  international 
trade,  brief  statistics  of  production  will  be  found  in  the  chapter 
on  Foreign  Commerce. 

Whether  or  not  we  shall  always  maintain  our  industrial 
supremacy  again  brings  up  the  subject  of  conservation  and  the 
plea  for  a  more  scientific  utilization  and  distribution  of  our  re¬ 
sources  and  products.  If  our  opportunity  for  world-wide  ex¬ 
pansion  in  foreign  trade  is  to  be  met,  the  demand  for  our  com¬ 
modities  will  be  tremendous  and  the  drain  on  what,  in  the  last 
analysis,  is  the  basis  of  our  wealth — our  natural  resources — 
will  be  unprecedented.  And  yet,  it  is  authoritatively  esti¬ 
mated  by  our  government  bureaus  that  our  present  known 
stores  of  coal,  which  is  the  basis  of  practically  all  our  indus¬ 
tries,  and  iron  ore  and  copper,  will  all  have  been  exhausted 
by  the  end  of  the  century.  When  it  is  known  that  the  waste  in 
coal  mining  exceeds  50%,  with  corresponding  waste  in  the 
production  of  other  basic  commodities,  it  is  not  surprising  that 
the  National  Conservation  Committee  estimates  that  the  actual 
monetary  loss  in  these  industries  alone  exceeds  $1,400,000 
per  day.  Thus  must  the  best  minds  of  the  country  necessarily 
be  directed  with  constantly  greater  attention  to  the  economics 
of  production  as  well  as  to  the  distribution  on  a  larger  scale  of 
our  products  in  the  years  to  come. 


Foreign  Commerce 

THE  tremendous  industrial  development  of  the  United 
States  in  recent  years  is  well  shown  by  a  review  of  the 
records  of  our  foreign  trade.  While  the  war  is,  of  course, 
responsible  for  the  enormous  expansion  of  the  last  three  years, 
it  is  safe  to  say  that  even  if  the  war  had  not  occurred  the  figures 
would  have  continued  to  show  the  steady  growth  which  has  been 
maintained  since  1880.  Up  to  that  time  our  imports  exceeded 
our  exports  in  practically  every  year  by  many  millions  of  dollars, 
but  since  that  year  we  have  fallen  behind  only  three  times  (in 
1888,  1889  and  1893);  and  while  we  ranked  fourth  among  ex¬ 
porting  nations  in  1880,  we  were  third  in  1890,  second  in  1910, 
and  at  the  present  time  we  not  only  occupy  the  first  place,  but 
we  have  paid  off  our  earlier  indebtedness  to  all  of  the  foreign 
countries. 

In  1880,  when  our  total  exports  of  merchandise  amounted 
to  $836,000,000,  our  imports  were  $668,000,000,  leaving  a 
balance  of  trade  in  our  favor  amounting  to  $168,000,000. 
By  1900  this  balance  had  grown  to  $545,000,000,  but  in  1914, 
the  year  before  the  war,  it  had  decreased  to  $470,000,000, 
owing  to  a  heavy  increase  in  our  imports,  which  exceeded 
$1,890,000,000  in  that  year;  and  in  the  fiscal  year  ending 
June  30,  1917,  we  exported  merchandise  of  a  value  exceeding 
the  huge  total  of  $6,250,000,000,  while  our  imports  amounted 
to  approximately  $2,600,000,000. 

The  resulting  favorable  trade  balance  of  $3,650,000,000  is 
enormously  greater  than  any  hitherto  applicable  to  any  country 
since  the  beginning  of  international  commerce,  and  places 
the  United  States  in  the  front  rank  among  the  exporting  nations 
of  the  world. 

During  the  first  century  of  our  national  existence,  our  exports 
were  chiefly  agricultural  products,  to  which  mineral  products 
were  later  added,  and  in  the  decade  preceding  the  war  our 
principal  exports  were  raw  cotton,  iron  and  steel,  and  their 
manufactures,  copper  and  its  manufactures,  meat  and  dairy 


Our  United  States 


[24 


products  and  breadstuffs,  in  the  order  mentioned;  and  in 
normal  times  our  imports  are  chiefly  sugar,  chemicals,  rubber, 
coffee,  tea  and  spices,  raw  silk,  hides  and  skins,  etc. ,  things  which 
we  cannot  produce  at  home.  In  the  last  three  years,  however, 
the  bulk  of  our  export  has  been  comprised  of  food  and  war  ma¬ 
terial,  while  our  imports  are  chiefly  raw  materials  for  manu¬ 
facturing  purposes. 

In  the  fiscal  year  ending  June  30,  1917,  our  exports  of  wheat 
and  wheat  flour  amounted  to  $385,000,000  in  value,  against 
$142,000,000  in  1914,  $141,000,000  in  1900  and  $226,000,000 
in  1880,  which  year  witnessed  the  highest  figure  up  to  1915. 
Our  exports  of  corn  were  worth  $75,000,000  in  1917  against 
an  average  of  $30,000,000  for  the  last  decade,  and  our  export 
of  meat  and  dairy  products  in  1917  brought  $400,000,000 
against  $146,000,000  in  1914.  Our  exports  of  iron  and  steel 
and  their  manufactures  exceeded  $1,100,000,000  in  1917  against 
$250,000,000  before  the  war,  while  our  exports  of  copper,  brass 
and  zinc  and  their  manufactures  increased  from  $153,000,000 
to  $759,000,000  in  the  same  period.  Some  of  our  exports  of 
which  Europe  requires  a  large  amount  in  normal  times,  notably 
lumber,  agricultural  implements  and  cotton,  show  a  consider¬ 
able  decrease  from  the  average  figures. 

Our  imports  have  increased  principally  in  raw  materials  for 
manufacturing  purposes,  which  in  1917  were  about  $500,000,000 
more  in  value  than  the  imports  of  1914,  which  amounted  to 
$633,000,000. 

The  growth  of  the  United  States  as  an  export  nation,  dis¬ 
regarding  our  war  trade,  is  not  merely  the  result  of  a  normal 
increase  in  the  foreign  demand  for  our  products.  In  the  first 
century  of  our  national  existence,  our  producers  were  primarily 
concerned  with  meeting  the  local  demand  which  steadily  in¬ 
creased  with  our  enormous  growth  in  population,  and  were  con¬ 
tent  to  leave  the  foreign  markets  to  the  producers  of  the  older 
countries  excepting  only  those  raw  materials  of  which  we  have 
always  had  a  surplus.  The  tremendous  development  of  our 
manufactures  in  recent  years,  however,  totally  changes  the 


Foreign  Commerce 


25  ] 


aspect  of  our  trade.  We  can  no  longer  maintain  our  conser¬ 
vative  attitude  of  doing  business  in  our  own  way  and  on  our 
own  terms.  The  exigencies  of  foreign  trade  force  us  not  only 
to  meet  the  requirements  as  we  find  them,  but  to  seek  the  best 
methods  of  stimulating  the  demand  for  American  products  in 
the  markets  of  South  America,  Russia  and  the  Orient,  if  we 
would  more  successfully  meet  the  competition  of  the  European 
producers. 

Our  prosperity  will  be  permanent  only  when  a  market  can 
be  found  for  all  the  goods  we  can  produce.  The  opening  up 
of  the  vast  resources  of  raw  materials  in  the  central  and  western 
states,  through  the  development  of  our  transportation  facilities, 
the  exploitation  of  the  world’s  greatest  resources  of  power, 
and  the  application  of  power  to  labor-saving  machinery  on  a 
huge  scale,  has  tremendously  stimulated  the  manufacturing 
industry  in  the  United  States,  although  since  1880  manufac¬ 
turers  have  constituted  the  most  significant  advance  in  our 
foreign  trade,  the  productive  power  of  many  of  the  manufac¬ 
turing  industries  has  reached  or  exceeded  the  limit  of  the  demand 
in  the  home  market.  Therefore,  in  order  to  keep  invested 
capital  employed  at  the  point  of  most  economical  production, 
by  finding  a  market  for  all  it  can  produce,  our  manufacturers 
are  compelled  to  seek  constantly  greater  outlets  in  foreign 
trade.  Branch  banks  are  being  established  in  many  of  the  prin¬ 
cipal  foreign  cities,  which  will  facilitate  the  problems  of  exchange 
and  through  which  important  credit  information  and  other 
valuable  assistance  will  be  gained,  and  men  trained  in  the 
business  of  producing  and  marketing  goods  of  every  description 
are  seeking  the  best  methods  of  distributing  our  products. 
America  is  awake  to  her  opportunity,  and  no  time  in  history 
has  been  comparable  to  the  present  moment  for  intrenching 
our  position  as  the  leading  nation  in  the  commerce  of  the 
world. 


United  States  Bonds 

THE  United  States  of  America  has  always  been  a  debt¬ 
paying  nation — and  not  a  debt-making  nation.  The 
first  recommendation  which  Alexander  Hamilton,  our 
first  Secretary  of  the  Treasury,  made  to  Congress  at  the  close 
of  the  Revolutionary  war,  was  that  the  debts  of  the  different 
states  which  had  composed  the  Confederation  should  be  as¬ 
sumed  and  paid  by  the  general  government.  In  a  way,  this 
was  a  startling  proposition,  but  it  was  appreciated  by  our  fore¬ 
fathers  that  not  only  good  morals,  but  good  business  demanded 
that  the  new  country  should  have  an  unimpeachable  credit. 

The  new  government  assumed  debts  amounting,  all  told, 
to  $72,775,895 — of  which  $12,556,874  was  foreign,  $40,256,802 
was  domestic  debt  of  the  Confederation,  and  $19,962,219  was 
debt  of  the  states.  Before  the  War  of  1812  the  public  debt  had 
been  reduced  to  a  little  over  $45,000,000.  That  war  raised 
the  country's  debt  to  $127,334,933,  which  amount  was  reached 
in  1816. 

The  public  debt  was  all  paid  in  1835.  Chiefly  on  account 
of  the  Mexican  war,  the  debt  by  July  1,  1850,  had  reached  the 
sum  of  $63,452,773.  From  this  point  on  it  greatly  increased  until 
at  the  beginning  of  the  Civil  war  it  amounted  to  $90,580,873. 
This  increase  was  chiefly  due  to  the  expenses  of  several  Indian 
wars,  and  to  some  small  loans  made  in  anticipation  of  internal 
difficulties. 

At  the  opening  of  the  Civil  war  the  Treasury  was  depleted, 
and  the  national  credit  reduced  to  a  12%  basis.  The  Admin¬ 
istration  found  itself  face  to  face  with  great  problems,  of  which 
the  financial  problem  was  not  the  least.  The  financial  measures 
of  the  war  were,  to  a  great  extent,  expedients  of  the  hour.  No 
machinery  existed  for  the  collection  of  the  newly  created  in¬ 
ternal  taxes.  The  country  had  no  uniform  currency.  The  banks 
displayed  only  a  weak  patriotism.  Customs  duties  were  the 
main  reliance  at  first,  but  the  returns  in  1861  were  nearly 
$14,000,000  less  than  in  the  previous  year,  and  in  1862,  while 
nearly  $10,000,000  greater  than  in  1861,  were  only  $49,000,000 


27] 


United  States  Bonds 


as  compared  with  $53,000,000  in  i860.  Every  form  of  credit 
was  availed  of,  with  which  to  secure  the  means  for  carrying  on 
the  war.  Secretary  Chase  adapted  his  borrowing  to  the  vary¬ 
ing  whims  and  needs  of  capital.  Short  term  notes  bearing  inter¬ 
est,  demand  notes  receivable  for  customs,  interest-bearing 
bonds,  legal  tender  notes,  and  even  the  receipt  of  temporary 
deposits  were  made  use  of ;  over  twenty  different  forms  of  paper 
were  issued,  bearing  rates  of  interest  ranging  from  7.3%  down 
to  nothing,  and  with  maturities  of  from  thirty  days  to  forty 
years.  At  the  same  time,  provision  was  made  for  funding 
these  different  forms  of  debt  by  reserving  the  option  of  redemp¬ 
tion  after  the  lapse  of  a  comparatively  short  period. 

Secretary  Chase  believed,  and  correctly  so,  that  the  debt 
should  not  be  put  in  a  form  to  be  out  of  the  reach  of  the  govern¬ 
ment.  He  confidently  expressed  the  opinion  that  the  debt 
could  readily  be  refunded  at  lower  rates  of  interest  the  moment 
the  war  was  over.  The  government  loans  were  a  great  success. 
This  success  was  due,  not  wholly  to  patriotism,  but  to  a  very 
great  degree  to  the  indefatigable  efforts  of  the  national  loan 
agents.  But  underneath  all  was  a  solid  basis  of  confidence,  due 
to  the  judicious  measures  of  taxation  which  were  devised 
coincidentally  with  the  appeals  for  loans. 

August  31,  1865,  the  public  debt  of  the  United  States  reached 
its  maximum,  amounting  to  $2,844,649,000. 

The  Civil  war  loans  were  placed  at  par  in  currency,  but  com¬ 
missions  ranging  from  to  1%  were  allowed  to  the  bankers 
distributing  the  bonds.  The  nominal  interest  paid  by  the 
government  on  its  bonds  during  the  war  period  was  almost 
exactly  6  % ,  but  because  of  the  varying  rates  of  discount  on  the 
legal  tender  notes,  the  actual  cost  of  the  money  in  gold  ranged 
from  6^%  to  about  15^ %. 

The  redemption  of  the  debt  began  the  moment  the  war  was 
over,  and  continued  almost  uninterruptedly  down  to  the  be¬ 
ginning  of  the  present  war.  There  has,  of  course,  been  some 
fluctuation,  but  the  tendency  has  constantly  been  downward, 


Our  United  States 


[28 


so  that  at  the  beginning  of  the  present  war  the  indebtedness 
of  the  United  States  was,  in  round  figures,  about  $1,000,000,000. 
Prior  to  the  present  war  the  government  debt  consisted  almost 
entirely  of  bonds  payable  at  the  pleasure  of  the  government  at 
future  dates,  ranging  from  one  year  to  forty-four  years.  The 
government,  however,  had  retained  the  privilege  of  redemption 
on  several  of  the  issues  outstanding.  There  were  also  out¬ 
standing  a  small  amount  of  treasury  notes  having  a  maturity 
of  one  year. 

The  present  war  has  been  financed  to  date  with  two  forms 
of  indebtedness — namely,  the  Liberty  Loan  3^%  Bonds,  pay¬ 
able  in  thirty  years  and  redeemable  after  fifteen  years,  of 
which  $2,000,000,000  have  been  issued — and  Certificates  of 
Indebtedness  bearing  rates  of  interest  ranging  from  3%  to 
4%,  all  of  them  payable  within  ninety  days  from  date,  of 
which  certificates  there  have  been  issued  $2,350,000,000  and 
$1,250,000,000  are  now  outstanding. 

Bonds  are  issued  for  the  purpose  of  investing  the  savings 
of  those  who  have  money  which  they  want  to  place  at  interest 
on  a  more  or  less  permanent  basis.  Certificates  of  Indebtedness 
are  intended  for  convenience  in  borrowing  money  from  the 
banks,  and  while  to  some  extent  they  are  taken  by  private  in¬ 
vestors  and  other  corporations  than  banks,  they  are  especially 
adapted  to  the  necessities  of  banking  institutions.  They  must 
be  paid  for  within  a  year’s  time,  and  as  a  rule  will  probably  be 
issued,  as  has  been  the  practice  during  the  past  year,  payable 
within  ninety-day  periods.  They  are  a  great  convenience  in 
financing  temporary  needs  of  the  Treasury  pending  the  realiza¬ 
tion  from  the  sale  of  long  period  bonds  or  of  the  income  from 
taxation.  The  total  amount  of  these  certificates  which  may 
be  outstanding  at  any  one  time,  under  the  terms  of  the  Act  of 
September  24,  1917,  including  those  already  issued  under  the 
terms  of  the  Act  of  April  24,  1917 — namely,  the  first  Liberty 
Loan  Act — is  limited  to  $4,000,000,000. 

By  the  terms  of  the  Act  of  September  24,  1917,  a  third  form 
of  indebtedness,  namely,  War  Savings  Certificates,  has  been 


United  States  Bonds 


29] 


provided  for.  The  idea  of  the  War  Savings  Certificates  is 
borrowed  from  England,  where  similar  certificates  have  proved 
to  be  very  popular.  These  certificates  are  primarily  intended 
for  the  convenience  of  the  small  investor.  They  are  to  be  issued 
as  discount  certificates — that  is  to  say,  they  will  be  issued  in 
amounts  which,  with  the  interest  thereon,  will  accumulate  to  an 
even  sum  of,  say,  $5.00  at  the  end  of  a  five-year  period.  That 
is,  anyone  having  about  $4.00  to  invest  will  be  able  to  step  into 
a  post  office  or  other  agency  and  purchase  one  of  these  certifi¬ 
cates,  which,  at  the  end  of  five  years,  he  can  redeem  for  $5.00, 
and  thus  will  receive  back  his  original  investment  with  interest 
at  the  rate  of  4%  per  annum.  No  announcement  has  yet  been 
made  in  regard  to  the  details,  but  it  readily  can  be  seen  that 
these  certificates  will  be  most  popular  with  all  of  us  having 
small  sums  to  invest. 

Now,  as  to  the  nature  of  a  Government  Bond:  Corporations 
and  private  individuals  borrowing  money  usually  have  to  give 
some  kind  of  security.  If  an  individual  desires  to  borrow  money 
to  help  pay  for  his  home,  he  gives  the  savings  bank,  or  whoever 
may  loan  him  the  money,  a  mortgage  on  his  house.  If  a  corpor¬ 
ation — say  a  railroad  company — desires  to  borrow  money  it 
gives  a  trustee,  such  as  Bankers  Trust  Company,  a  mortgage 
on  its  entire  property  to  secure  an  issue  of  bonds  for  some  round 
amount,  which  bonds  can  then  be  purchased  in  sums  of  $1,000 
or  less,  and  perhaps  will  be  held  by  five  or  ten  thousand  different 
investors,  all  of  whom  will  have  their  money  proportionately 
secured  by  the  property  pledged  to  the  trustee  who  is  looking 
after  their  interests. 

The  United  States  Government,  however,  does  not  need  to 
give  mortgage  security,  because  every  one  of  us  is  liable  to  be 
taxed  in  order  to  enable  the  government  to  raise  the  money 
necessary  to  pay  the  interest  on  the  bonds  while  outstanding, 
and  to  pay  the  principal  thereof  at  maturity.  The  owner  of  a 
government  bond,  therefore,  has  in  effect  a  mortgage  upon  the 
earnings  and  income  of  every  citizen  of  the  country.  Such 


Our  United  States 


[30 


bonds  are,  perforce,  the  very  highest  form  of  investment  se¬ 
curities. 

For  the  convenience  of  investors,  bonds  are  issued  in  de¬ 
nominations  ranging  all  the  way  from  $50  up  to  $100,000,  so 
that  the  small  investor  and  the  large  investor  alike  can  share 
in  this  premier  form  of  investment  securities. 

For  the  convenience  of  investors,  the  government  issues  two 
forms  of  bonds.  One  form  is  known  as  the  coupon  bond — this 
is  payable  to  bearer,  exactly  the  same  as  a  banknote.  To 
collect  the  interest,  the  holder  simply  has  to  cut  off  a  coupon, 
which  is  an  agreement  to  pay  on  a  fixed  date  the  amount  of 
interest  due  upon  that  date.  On  some  of  the  older  forms  of 
bonds  the  interest  is  payable  every  three  months,  and  therefore 
each  bond  has  four  coupons  for  each  year.  In  the  case  of  the 
Liberty  Loan  Bonds,  interest  is  payable  twice  a  year,  and  there¬ 
fore  these  bonds  have  two  coupons  for  each  year.  These 
coupons  are  payable  to  bearer,  exactly  the  same  as  a  banknote, 
and  can  be  cashed  at  the  Sub-Treasuries  or  at  the  Federal 
Reserve  Banks,  or,  as  a  rule,  over  the  counter  of  any  bank  or 
banker. 

The  other  form  of  bond,  and  one  which  is  very  popular  with 
many  investors,  is  what  is  known  as  a  registered  bond.  A 
registered  bond  is  payable  like  a  cheque  to  the  order  of  the 
owner.  Such  a  bond  cannot  be  negotiated  until  the  owner  has 
endorsed  it,  just  as  he  would  a  cheque,  and  until  that  endorse¬ 
ment  has  been  guaranteed  by  someone  who  is  authorized  by  the 
government  to  witness  signatures.  The  interest  on  registered 
bonds  is  payable  by  cheque,  mailed  from  the  Treasury  Depart¬ 
ment  in  Washington  to  the  post  office  address  of  the  owner 
of  the  bond,  and  this  cheque,  of  course,  will  only  be  paid  to  the 
owner  of  the  bond,  or  to  someone  to  whom  he  may  make  it 
payable,  exactly  like  any  other  bank  cheque.  Those  who  do 
not  have  bank  accounts,  however,  can  readily  have  these  cheques 
cashed  by  any  bank  or  banker  where  they  are  known,  without 
any  charge  for  exchange. 


31] 


United  States  Bonds 


It  will  thus  be  seen  that  the  registered  form  of  bond  is  much 
the  better  form  for  those  who  want  to  put  bonds  away  for 
permanent  investment,  as  the  bonds  themselves  may  be  locked 
up  in  a  safe-deposit  box  or  some  other  safe  place,  and  need  never 
be  taken  out  until  they  become  due.  The  interest  cheques  will 
come  along  regularly  every  six  months,  without  failure. 

The  question  may  be  raised — suppose  I  need  the  money 
which  I  have  invested  in  government  bonds;  how  can  I  obtain 
it?  The  answer  to  this  is  very  simple.  The  holder  of  a  govern¬ 
ment  bond,  having  the  premier  form  of  investment,  can  always 
sell  that  bond  to  some  other  investor.  Of  course,  it  must  be 
sold  in  the  market,  at  a  price  which  is  determined  by  the  interest 
rate  generally  prevailing  for  prime  securities  at  the  time  when 
it  is  desired  to  realize  upon  the  investment.  If  the  rate  of 
interest  rises,  the  price  of  bonds  will  go  down  somewhat  in 
order  to  adjust  the  income  to  the  prevailing  rate.  On  the  other 
hand,  if  the  rate  of  interest  decreases  the  price  of  bonds  will 
tend  to  advance,  so  as  to  adjust  the  interest  to  be  derived  there¬ 
from  to  the  lower  rate  prevailing  in  the  market. 

During  the  progress  of  the  war,  if  the  government  needs  to 
raise  additional  money  it  may  be  that  the  interest  rate  will  tend 
to  increase,  and  that,  therefore,  the  government  may  have  to  pay 
more  for  money  later  on  than  it  is  offering  to  pay  now.  In 
order  to  be  perfectly  fair  with  investors,  the  government, 
therefore,  has  provided,  both  in  the  original  issue  of  3^% 
Liberty  Loan  Bonds,  and  in  the  present  issue  of  4%  Liberty 
Loan  Bonds,  that  in  case  it  becomes  necessary,  during  the 
progress  of  the  war,  to  sell  bonds  bearing  a  higher  rate  of  in¬ 
terest,  the  holders  of  the  present  issues  will  have  the  right  to 
convert  their  bonds  into  bonds  bearing  such  higher  rate  of 
interest.  It  will  thus  be  seen  that  the  investor  is  perfectly 
protected,  against  any  depreciation  in  market  value  due  to  an 
appreciation  in  the  interest  rate. 

On  the  other  hand,  if  the  experience  of  the  country  following 
the  close  of  the  present  war  is  similar  to  the  experience  of  our 
forefathers  at  the  close  of  the  Civil  war,  the  vast  revenues  of  the 


Our  United  States 


UNIVERSfTY  OF  ILLINOIS-URBANA 


[32 


government  will  enable  it  rapidly  to  redeem  indebtedness, 
either  by  calling  in  bonds,  or  by  buying  them  in  the  market, 
which  will  tend  to  rapidly  raise  the  market  values.  Therefore, 
it  would  appear  that  an  investor  in  Liberty  Loan  Bonds  at  the 
present  time  is  perfectly  protected  from  any  depreciation,  and 
may  look  forward,  if  he  finds  it  necessary  to  convert  his  bonds 
into  cash  at  a  later  date,  to  being  able  to  do  so  at  a  substantial 
profit. 

The  question  may  be  raised  as  to  taxation — are  government 
bonds  taxable?  The  answer  to  this  is,  that  all  the  issues  of 
government  bonds  which  were  outstanding  before  we  entered 
into  the  war  are  absolutely  exempt  from  taxation  of  every 
kind.  The  %  Liberty  Loan  Bonds  are  free  from  all  taxation 
except  inheritance  taxes.  The  new  4%  Liberty  Loan  Bonds 
are  exempt  from  all  taxation  except  what  is  known  as  super¬ 
taxes,  war-profits  taxes  and  inheritance  taxes.  Up  to  a  maxi¬ 
mum  of  $5,000  principal,  however,  this  issue  of  bonds  is  also 
exempt  from  every  form  of  taxation,  except  the  inheritance 
taxes. 

It  may  be  interesting  to  note  that,  for  anyone  having  an 
investment  in  government  bonds  of  less  than  $2,500,000,  the 
4%  Liberty  Loan  Bonds,  subject  to  the  super-taxes,  are  more 
profitable  to  hold  than  the  3  A  %  Liberty  Loan  Bonds. 

To  sum  up — it  may  be  said  that  for  absolute  safety,  ready 
convertibility,  regularity  and  certainty  of  income — the  bonds 
of  the  United  States  Government  are  unexcelled  as  an  invest¬ 
ment  by  any  other  security,  of  anyjkind  or  nature. 


